The Canadian pharma and life sciences space saw many developments in 2020, despite and in some cases because of the COVID-19 pandemic. The industry was among the heroes of 2020, developing, commercializing and distributing drugs, vaccines, and personal protective equipment to deal with COVID-19 at remarkable speeds.
In addition to evolving public health measures related to the pandemic, governments also advanced major policy initiatives, such as reforms to the Patented Medicines Price Regulation Board (PMPRB) and other regulatory matters at Health Canada.
It was also a busy year before the Courts: supported by adapting practice directions, parties and the profession made a seismic shift toward virtual hearings. The year saw the first trials and decisions in actions under the new Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations). There were also several judicial review proceedings challenging government action in the pharmaceuticals space, including the reforms to the PMPRB as well as Health Canada decisions regarding the issuance of certificates of supplementary protection (CSPs).
1. Major Policy Initiatives
In response to the COVID-19 pandemic, the federal government pursued Interim Orders and other policy changes intended to expedite the development of COVID-19-related products, including drugs, vaccines, hand sanitizers, disinfectants, personal protective equipment, and medical devices (see e.g., here and here). Both the federal and provincial governments made regulatory changes to secure domestic drug supplies and mitigate shortages (see e.g., here and here). Many of these policies were passed on an interim basis but still remain in effect.
The federal government also amended the Patent Act, adding a provision that allowed the Minister of Health to apply for authorization to make, construct, use, and sell a patented invention for a public health emergency. The ability to grant an authorization under this provision expired on September 30, 2020. As described in our global survey, Canada's pre-existing provisions for authorizing government use of patented inventions remain in effect.
(b) Continued Changes to the PMPRB
As we reported, in 2019, the government amended the PMPRB's Patented Medicines Regulations. These amendments were intended to lower the prices of patented medicines in Canada by changing how the PMPRB assess whether patentees' prices are "excessive". The key changes include the addition of new factors such as pharmacoeconomic value, a new list of international comparator countries that removes the US and Switzerland while adding several others, and a new method for calculating net prices that was intended to capture third-party payments (e.g., pursuant to formulary listing agreements).
An application for judicial review challenging key provisions of the amended Patented Medicines Regulations was heard and decided by the Federal Court in June 2020. The Court struck down the new price calculation but upheld the other impugned amendments. This decision is currently under appeal and cross-appeal in Federal Court of Appeal File No. A-215-20.
In addition, 2020 saw a separate constitutional challenge to the PMPRB and amendments, which was decided by the Superior Court of Quebec in December 2020. In this decision, the Court also struck down the new price calculation.
Meanwhile, the implementation of the amended Patented Medicines Regulations was twice delayed from the originally scheduled date of July 1, 2020: first, until January 1, 2021 and then to July 1, 2021.
In parallel, the PMPRB released its new guidelines on October 23, 2020. These guidelines are scheduled to take effect at the same time as the amendments to the Patented Medicines Regulations on July 1, 2021. The new guidelines have been challenged in an application for judicial review in Federal Court File No. T-1419-20.
On July 1, 2020, the Canada-United States-Mexico Agreement Implementation Act (CUSMA) came into force.
As we reported in 2019, CUSMA no longer includes an extension to Canada's existing eight-year term of data protection for biologics. However, it does include a patent-term restoration system (PTR) intended to allow patent holders to recover time lost due to "unreasonable delays" in patent issuance. CUSMA provides Canada with a 4½ year grace period to fully implement PTR. Implementing legislation has yet to be introduced, as PTR was not addressed in the CUSMA Implementation Act.
In addition, Health Canada also amended regulations to allow for the distribution of samples of over-the-counter drugs and national health product to the public in accordance with CUSMA.
(d) Other Health Canada Initiatives
Separate from its work on the COVID-19 pandemic, Health Canada provided guidance on the regulation of software as a medical device and on the regulations requiring plain language labelling for non-prescription drugs. Health Canada also finalized its regulations concerning the sale of unapproved drugs for emergency treatment under the Special Access Programme.
2. 2020 in the Courts
Despite the COVID-19 pandemic, 2020 still managed to be a big year for litigation in the pharma and life sciences sector. Adapting to public health guidance that included lockdowns and limits on in-person gatherings, the courts released evolving procedural guidance and practice directions, and hearings for many matters shifted from in-person to online.
In the IP space, the Federal Court also released new consolidated guidelines aimed at increasing proportionality in complex proceedings.
(a) New PM(NOC) Regulations: year three
The courts also provided guidance on a number of issues relating to the mechanics of actions under this unique procedural regime. One of these decisions explained the role that patent holders may play in an action under this regime where the plaintiff marketing the drug is a licensee. Another of these decisions held that actions under this regime may still proceed where the patents at issue expire before trial. The Federal Court of Appeal also weighed in on some of these procedural disputes, offering its guidance on when actions concerning the same drug may be heard partially together.
(b) Judicial Review Decisions
2020 was an active year for judicial review of government decisions in the pharma and life sciences space.
Two innovative drug companies successfully sought judicial review of Health Canada's decisions to deny their CSP applications. The first of these cases dealt with whether a vaccine adjuvant was a "medicinal ingredient", while the second dealt with whether an eligible patent under the CSP Regulations must claim all of the medicinal ingredients contained in a combination drug product. In each case, the Federal Court held that the Minister's decision was unreasonable and sent the matter back for redetermination.
The Federal Court also issued decisions affecting the ability to obtain approval for generics. In one case, the Court upheld data protection for subsequently approved combination drugs containing new chemical entities, preventing such drugs from being used as Canadian reference products for generics. In another case, the Court provided guidance on the criteria for providing effective consent to making, constructing, using, or selling a drug under the PM(NOC) Regulations for the purpose of obtaining approval.
We also reported on the PMPRB's redetermination in a case about the test for determining whether a patent pertains to a medicine for the purpose of the PMPRB's jurisdiction. After being overturned on judicial review in the Federal Court and the Federal Court of Appeal, the Board once again asserted jurisdiction over the medicine based on clinical similarities to the invention claimed in the patent.
Some of these matters remain the subject of ongoing litigation.
(c) Other Pharmaceutical Decisions
There were other decisions in 2020 that were also relevant to the pharmaceutical and life sciences sector.
In January, the Federal Court held that successful patent holders in infringement actions are entitled to pre-judgement interest on their damages equal to their real-world rate of return, provided they can establish the rate of return with evidence. This decision is currently under appeal.
In March, in the accounting of profits quantification phase of a long-running litigation, the Federal Court of Appeal affirmed the availability of the non-infringing alternative defence to reduce the infringer's profits due to its patent infringement, but held that it was not available on the facts of the case before it. In September 2020, an application for leave to appeal that decision to the Supreme Court of Canada was dismissed.
The Pharma in Brief Team thanks you for readership in 2020. We will continue to monitor developments and share our findings with you in 2021 and beyond.
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